TEACHING AND
LEARNING HOW TO CREATE A HOUSEHOLD BUDGET PLANNING PERSONAL MONEY SAVING STRATEGY HOME PRACTICAL ADVICE IDEAS EDUCATION
FREE ARTICLE
Creating
a budget is a first step towards building good
money management skills.
CREATING A PERSONAL BUDGET
Since you are here,
you probably discovered that you
need to start tracking your
expenses, and learn to spend less,
and save more. That's great!
Creating a budget is an important
first step to building sound money
management skills.
What is a budget?
A budget is a plan
for managing your money. It is
an estimate of income and expenses
over a period of time. With a
personal budget, you can get a better
idea of where you spend your money,
to whom you owe money, and how much.
TRACKING YOUR EXPENSES
The first step to create a budget
is to determine how
much money you spend, and to whom
you are paying that money. To
do this, you will need to track your
expenses, or
spending, for at least a month, and
the longer the better. We suggest that you track your spending
for three months or more to get an
even better estimate of your
spending habits.
Keep your receipts, and write on your budget tracking worksheet all
your expenses. Don't forget to also track all purchases made with cash,
including small items.
These will be more difficult to track (if you don't get a receipt), but try to
write down as much as you can with a paper and pencil. You may want to
keep a little notebook with you to write down expenses as they occur.
Also, at the end of
the week, you should try to estimate any payments with cash that you made, that
you did not write down that
week. If you are not good at tracking your cash expenses, at least keep
track of how much cash you put in your wallet, so you know how much you are
spending. Then add that amount to your budget tracking worksheet.
TYPES OF EXPENSES
As you start to track your expenses, it is helpful to break your spending into
different categories. There are two main categories of expenses:
essential and non-essential expenses. Essential expenses are
expenses that are required for living. Non-essential expenses are the
extra things you spend your money on. In addition, essential expenses may
be broken down into fixed expenses and variable expenses.
ESSENTIAL EXPENSES - FIXED AND
VARIABLE
FIXED EXPENSES
Fixed expenses are expenses that are the same each month.
Examples include rent or mortgage, car payments, car insurance, property taxes,
home insurance, and school loans.
VARIABLE EXPENSES
Variable expenses are expenses that vary each month.
Examples include car maintenance, gasoline, food, electricity, heating gas,
phone, etc.
NON-ESSENTIAL EXPENSES
Non-essential expenses include most of the things we don't need,
and most often includes many items where we waste money the most. It
includes spending on clothing, books, movies, magazines, video games, dining
out, gifts, snacks, candy, shoes, etc.
While clothing may be considered an essential expense, how much of it that we buy do we really need? If you want, create
two separate categories for non-essential expenses. Place some of your
clothing money into essential expenses, and the remainder into non-essential
expenses.
Again, track your
expenses for at least one month.
This will give you insight into
where your money is going, and also
help you determine where you might
be able to spend less and save more.
By tracking your expenses, you will
be able to better plan for your
future needs.
After tracking your
expenses, you will be able to set up
an estimate of your budget, based on the expenses
information you have been tracking.
Do you have an idea or
recommendation on how to create a budget? Then please leave us a
suggestion.
For additional related material for
teaching and learning about budgeting money, please see the following:
BUDGET LESSONS
Use these lessons to teach basic budget concepts. For teaching and
learning household budgeting
To learn money skills, personal finance, and money
management, please go to the Money
Instructor home page.
Learning to create a
personal budget -
Teachers High School Students -
Secondary education - Adults -
Special Education - Teens -
Teenagers - Kids - Children - Help
Practical Curriculum Theme -
Thematic Unit -
Wealth - Children - Secondary
Education - Middle School - Young
Adults - Classroom - Consumer Math
Saving
Creating
a budget is a first step towards building good
money management skills.
To learn money skills, personal finance, and money
management, please go to the